Investors Are Misinterpreting Positive Benefit Of $10 MoviePass On Cinemas

MoviePass, a movie theater subscription service, on Tuesday unveiled plans to lower the cost of its subscription to $10 a month from $30-and-up. Shares of AMC Entertainment Holdings Inc. , which have already been beaten up recently, fell as much as 5.8% during the day. It was followed down by shares of Imax Corp. , which fell 2.4%, Regal Entertainment Group's 1.9% drop, Marcus Corp.'s 1.5% fall, while Cinemark Holdings fell as much as 1%. MoviePass allows members to see a movie a day for just $10 a month. B. Riley analyst Eric Wold wrote in a note to investors that he believed investors were misinterpreting the MoviePass news as a negative for the box office and film exhibitors. "The key thing to keep in mind is that MoviePass cannot do this in a bubble -- they needed the approval of both studios and exhibitors, who would not sign off on anything that was detrimental to their financial outlook," Wold wrote. "Studios and exhibitors are not taking a discount under the MoviePass model. We understand that MoviePass is absorbing the ticket discount and hoping to make up the discount through monetizing the data and the breakage." Wold said this is a positive for the cinema group as well as box office and concession results, though he believes it will be a small benefit. Shares of AMC have declined nearly 61% in the year to date, while Imax shares are down nearly 41%, Regal Entertainment and Marcus Corp shares are both down almost 19% and shares of Cinemark are down 6%. By comparison, the S&P 500 index is up more than 10%.